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Obama softens his tone on offshoring

All that's missing is a plan for the H-1B visa

November 10, 2010 06:00 AM ET

Computerworld - WASHINGTON -- A few months ago, Congress raised the fees on H-1B visas, and midterm election candidates -- the Democrats in particular -- pummeled opponents over offshore outsourcing. These actions had the Indian government and its IT industry on edge and worried about new restrictions on the visa.

But in India this week, President Barack Obama reshaped offshoring as part of international trade. Instead of complaining of jobs moving to Bangalore, as he did last year, the president's message to India's leaders was soothing, emphasizing how trade works both ways.

Said Obama: "I want to be able to say to the American people when they ask me, 'Well, why are you spending time with India? Aren't they taking our jobs?' I want to be able to say, 'Actually, you know what? They just created 50,000 jobs.' And that's why we shouldn't be resorting to protectionist measures; we shouldn't be thinking that it's just a one-way street. I want both the citizens in the United States and citizens in India to understand the benefits of commercial ties between the two countries."

Indian IT business leaders seemed pleased with Obama's remarks, and India Prime Minister Manmohan Singh added his own point as well. "As far as India is concerned, India is not in the business of stealing jobs from the United States of America," he said. "Our outsourcing industry I believe has helped to improve the productive capacity and productivity of American industry."

Obama's message is in sharp contrast to what has been going on in the U.S.

U.S. Sen. Barbara Boxer (D-Calif.) slammed her Republican challenger, former Hewlett-Packard CEO Carly Fiorina, for layoffs and offshoring during her years at HP. Boxer won re-election.

In Ohio, Democratic Gov. Ted Strickland went so far as to sign an executive order in August prohibiting state agencies from contracting with any company that offshores a state service. Strickland lost his re-election bid to Republican John Kasich. Strickland's executive order will lose force once he leaves office.

U.S. Sen. Harry Reid (D-Nev.) made a last-minute attempt to provide tax breaks to companies that hire U.S. workers. He won re-election.

Obama may have signaled to the Indian government a willingness not to start piling restrictions on the H-1B visa and on offshoring in general. But much depends on what Congress does, and it is possible that the lame duck session could offer H-1B supporters an opportunity to make gains, particularly through amendments tacked on to some pending appropriations bills.

India is seeking a number of things from the U.S., including the creation of a service visa, apart from the H-1B visa, that could be used by firms that engage in IT services work. The Indian government is also seeking a totalization agreement, similar to agreements the U.S. has in Europe, that would end the need for Indian visa workers to pay Social Security and Medicare taxes. Unless they become permanent residents, those workers will not see benefits from those payments.

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